Yemen currency reserves reach four-year low

10 August 2009

The Central Bank of Yemen’s foreign currency reserves can only cover eight-and-a-half months of imports, a record low for the Arab world’s poorest country.

The country is struggling to cope with a cash crisis caused by falling oil revenues and an import-dependent economy.

The central bank’s foreign currency holdings fell 13 per cent in the 12 months to June 2009, from $8bn to $6.9bn, according to its latest bulletin released on 10 August.

The bank’s reserves were down more than $200m from the $7.1bn recorded in May, and down $700m from the $7.6bn recorded in January.

The June figure marked the bank’s lowest foreign reserve holdings since 2005.

In May, the bank had enough foreign currency reserves to cover nine months of imports.

By contrast, when reserves reached their lowest level in absolute terms in 2005, they were still sufficient to cover imports for almost 14 months.

Yemen is increasingly struggling to cope with falling oil revenues and an import-reliant economy, according to diplomatic sources in the country.

Sanaa wants Riyadh to give it a $2bn bailout before Ramadan (MEED 7:8:09).

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